Fees on the Firing Line
If it wasn’t clear before that the CFPB’s blog post targeting “junk” mortgage fees meant business, NEC Director Brainard’s comments endorsing it brought this on home. No matter the controversy and litigation, the Bureau has toppled credit-card late fees at least for now. It clearly plans a like-kind assault on mortgage costs, so we here turn to an analysis of which are on the firing line and how deadly the Bureau’s shots are likely to prove.
Hsu Says Opsrisk Not Cured by Capital, Liquidity
In remarks today on operational resilience, Acting Comptroller Hsu notes that operational risk is not “a problem that capital or liquidity can solve.” Karen Petrou has noted this most recently with regard to the operational-risk capital rules included in the current proposal, which are founded on the longstanding regulatory assumption that capital indeed buffers operational risk.
Senate Talk of Affordable Housing Turns to FHLB Role
At today’s Senate Banking Committee affordable-housing hearing, Chairman Brown (D-OH) again called for the Fed to cut interest rates to address the crisis. The hearing also touched on the role FHLBs can play, with Sen. Lummis (R-WY) stating her intentions to work with the system to expand its impact on the housing supply shortage.
CFPB to Proceed to Mortgage-Fee Rulemaking
NEC Director Brainard today said that the CFPB will pursue a rule or similar action to curtail mortgage-closing “junk” costs along the lines we identified following last week’s Bureau post in conjunction with the new White House competition strike force.
Biden Continues Junk Fee Campaign
The President continued his attack on junk fees in the State of the Union, applauding the CFPB’s new credit-card late fee rule. The President also boasted about recent monetary data, calling the American economy “the envy of the world” and called for Congress to pass Sen. Casey’s (D-PA) bill to stop shrinkflation.
FRB Finalizes FMU OpsRisk Update
The FRB today unanimously voted to finalize an update to rules governing operational risk-management for certain systemically-important financial market utilities (FMUs).
CFPB Lays Groundwork for Mortgage Closing-Cost Regulation
Continuing its campaign against junk fees, the CFPB today released a blog post focusing on mortgage closing cost fees, stating that the agency will issue rules and guidance “as necessary” to improve competition and affordability in the coming months. The post states that median total loan costs increased 22 percent on home purchase loans from 2021 to 2022, noting that many of these costs are fixed and not affected by interest rates.
CFPB Fires All Cylinders on Credit Card Fees
In conjunction with a new White House “price-gouging” initiative today ahead of the President’s address, the CFPB finalized its controversial credit-card late-fee proposal (see FSM Report CREDITCARD36).
Presidential Strike Force Targets Financial-Services Fees, Mergers
In conjunction with the CFPB’s new credit-card fee standard, the White House today announced a “strike force” attacking what it believes to be price-gouging across the U.S. economy.
Interchange, Small-Dollar Lending Bills Added to House Docket
Although Thursday’s HFSC Financial Institutions’ hearing will be a largely partisan review of the “politicized” nature of bank regulation, bills on the docket include a draft measure from Rep. Luetkemeyer (R-MO) requiring the FRB to conduct a quantitative study of the implications of its pending interchange rule before finalization (see FSM Report INTERCHANGE12).
McHenry Supports At Least Some Liquidity-Reg Rewrite
Redoubling his campaign against the capital proposal, HFSC Chairman McHenry (R-NC) today made it clear that he does support at least some revisions to liquidity rules.
IMF Looks Under U.S. Bank “Weak Tail”
Looking at U.S. bank failures one year later, the IMF today released a global financial stability note finding that the “weak tail” of U.S. banks continues to present a possible systemic risk despite ongoing supervisory and regulatory efforts.
Overdraft Fees
Building on a bulletin and circular from late 2022 warning banks about certain overdraft practices, the CFPB has now proposed a rule that would sharply and expressly limit fees for extensions of credit related to overdrawn transaction accounts unless the account comes under an array of consumer-protection requirements. Part of the Administration’s campaign against “junk fees,” the proposal sets a “break-even threshold based on a bank’s costs” and provides for an alternative break-even benchmark CFPB-set fee that would allow a lender to avoid costly additional regulatory requirements, expanding the Bureau’s recent focus on mandating industry pricing evident in its controversial proposal on credit-card late fees. Lines of credit and ready access to credit-card credit associated with overdrafts would also come under new limits and come under additional consumer-protection standards.
CFPB Tries to Bring Overdraft Fees Under New Benchmark
Arguing that overdraft fees are a big-bank “junk-fee harvesting machine,” CFPB Director Chopra today released a long-awaited proposal to cap fees to what the agency considers a reasonable threshold.
Bowman Expands Basel Critique, Key Dem Now Points to Problems
In remarks today, FRB Gov. Bowman did not go quite as far as her colleague Chris Waller yesterday, but she nonetheless urged that the end-game rules be re-proposed after comments are taken into account.
Senate Banking GOP Again Urges Capital Proposal Withdrawal
Senate Banking Ranking Member Scott (R-SC) along with all Committee Republicans late yesterday sent a letter to FRB Chair Powell, FDIC Chairman Gruenberg, and Acting Comptroller Hsu once again calling on the regulators to withdraw the capital proposal (see FSM Report CAPITAL230).
Biden, Brown Praise CFPB Overdraft Proposal
Following the CFPB’s announcement of its proposed rule regarding overdraft fees today, President Biden again denounced “junk fees” as “exploitation,” and included the CFPB’s proposal in his administration’s efforts to lower costs for American consumers.
FRB/FDIC Provide Limited-Time Resolution-Plan Filing Flexibility
Reflecting a problem we identified in our assessment of the resolution-plan proposal (see FSM Report LIVINGWILL22), the FRB and FDIC today extended the resolution plan submission deadline for categories II and III banks from July 1, 2024 to March 31, 2025.
Global Regulators Turn to OTC-Derivative Margin Improvement
Following yesterday’s release with the CPMI focused on CCPs and clearing members, the Basel Committee and IOSCO today …
HFSC’s HUD Hearing to Trod Partisan Ground
HFSC’s majority staff memo on Thursday’s hearing with HUD Secretary Fudge makes it still clearer that the session will focus on affordable housing, homelessness, and public-housing agencies in cities such as New York and Washington, D.C.
HFSC GOP Slams DOL Fiduciary Rule
At today’s HFSC Capital Markets Subcommittee hearing on the DOL’s Fiduciary Rule, Subcommittee Chairwoman Wagner (R-MO) argued that the proposal should be withdrawn, calling it a partisan effort to eliminate “junk fees.”
HFSC Takes Partisan Approach to FSOC
At today’s HFSC Digital Assets Subcommittee hearing on FSOC’s systemic-designation framework (see FSM Report SYSTEMIC98), Subcommittee Chairman Hill (R-AR) questioned FSOC’s approach to addressing systemic risk, claiming that the Council’s revised guidance is vulnerable to abuse and unintended consequences.
CFPB Small-Business Reg Survives
Senate Republicans tried today to override the President’s veto of the Congressional Review Act resolution approved by both Houses of Congress to repeal the CFPB’s small-business reporting rule.
HFSC GOP Turns to Merger-Policy Demands
Financial Institutions Subcommittee Chair Barr (R-KY) and Rep. Fitzgerald (R-WI) last night sent the federal banking-agency heads a stiff letter demanding to know when they plan finally to issue the long-promised bank-merger policy following public notice and comment.
China Leads New BIS CBDC Pilot
In a new CBDC project sponsored by the BIS’s Innovation Hub, central banks either directly associated with China or within its ambit will focus on multi-CBDC wholesale cross-border payments.
White House, Labor Turn to Retirement Advice “Junk Fees”
Building on its “junk-fee” initiative, the White House today expanded Obama-era “best-interest” standards to retirement advisers to close what it believes are loopholes in the SEC’s jurisdiction under its broker-dealer best-interest standard.
BIS CPMI: Even Sound Stablecoins May Not Be Worth the Effort
A new report from the BIS Committee on Payments and Market Infrastructures finds that properly designed and regulated stablecoins could improve cross-border payments by increasing speed and transparency while lowering costs, especially in emerging markets and developing economies.
GAO Vacates Key SEC Crypto Ruling
The GAO today released a report finding that the SEC’s staff accounting bulletin (SAB) 121 is a rule subject to the Congressional Review Act, throwing a key Gensler anti-crypto ruling into immediate ineffectiveness and an uncertain future.
Bowman Targets U.S. Leverage Ratio, NBFIs
In remarks during the Morocco IMF/Bank meeting today, FRB Gov. Bowman contrasted U.S. bank resilience with the IMF’s findings yesterday on potential vulnerabilities as rates rise and macroeconomic conditions soften.
FSB Reiterates Stability Concerns
The FSB’s latest work plan reiterates all it most recently said to the G20.
CFPB Barrels Down on “Basic” Banking Fees
In conjunction with a new White-House junk-fee initiative, the CFPB today issued “guidance” – i.e., essentially a final rule – banning large banks and credit unions from collecting “unreasonable” fees for what the Bureau considers reasonable and “basic” account information.
SEC Throws Wrench into TLAC Standards
As we noted yesterday, the FSB’s assessment of the global resolution framework’s effectiveness found significant glitches it urges national regulators quickly to address via standards such as those now pending in the U.S. to bring smaller banking organizations into the resolution-planning regime (see FSM Report LIVINGWILL23).
OFR Study: Short-Selling Does Not Harm Financial Stability
OFR today released a model-based study that finds no evidence that short-selling adversely affects financial stability.
Dems Slam Fed Climate Scenarios
Sens. Markey (D-MA), Warren (D-MA), Sanders (I-VT) and eight additional Democratic Senators and House Members sent a letter to Chair Powell today demanding that the Fed ensures that the financial institutions it oversees properly address the threat of climate change. Claiming that the Fed’s climate pilot scenarios are not sufficiently rigorous, the letter demands that the Fed require banks to submit and execute plans to align their activities with climate targets, such as reducing financed emissions.
Top Treasury Official Sounds Big-Tech Payments Alarm
Treasury Assistant Secretary for Financial Institutions Graham Steele Friday warned that Big-Tech firms’ entry into financial services could result in increased market concentration and predatory pricing, highlighting their ability to leverage existing commercial relationships as well as network effects. Mr. Steele also named consumer-data rights and junk fees as top priorities, praising the CFPB’s actions on personal data (see FSM Report DATA3) and credit-card late fees (see FSM Report CREDITCARD36).